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Sourcing Efficiency Is Key to MRO Supply Chain Strategy

Sourcing Efficiency Is Key to MRO Supply Chain Strategy
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The maintenance, repair, and operations (MRO) function within manufacturing facilities has always focused on efficiency. The theory was that MRO is a cost of doing business, a necessary expense that should be kept as low as possible.  That is still a primary objective today. Producers want to streamline the MRO supply chain through automation of repetitive processes so they can invest the preserved resources into more value-added processes and capabilities.
Automated ordering, invoicing, payments, and forecasting continue to squeeze as much value from the MRO supply chain as possible, but what if it were possible to not only identify existing sources of value and efficiency but to actually create value from the MRO supply chain?

That’s the promise of MRO sourcing efficiency.

Sourcing Efficiency

Sourcing MRO materials efficiently hinges on competition among suppliers. SDI has partnered with Fairmarkit, a leading intelligent sourcing platform provider, to integrate, automate, and digitize the way our customers find, evaluate, work with, and transact with their suppliers. As explained in this seminar, SDI and Fairmarkit approach hiring suppliers with the same vigor companies use in hiring employees:

  • Comprehensive interviews
  • Reference checks
  • RFPs and bidding
  • Multiple candidates
  • Vetting ALL suppliers, not just for big-ticket items and large contracts
  • Price comparisons
  • Regular performance reviews
  • No automatic increases

Compelling vendors to compete for your business not only ensures you pay fair market rates, but it also spurs suppliers to offer more inclusive services, advantageous terms, and strategic solutions. Fairmarkit’s process and SDI’s implementation and vendor management procedures
Ensure organizations establish a method for creating MRO value, establishing procurement rules, reducing risks, and generally keeping suppliers on their toes.

Sourcing Strategy

Sourcing efficiency creates value by building the institution’s SKU knowledge base, documenting best vendor-management practices, aggregation of orders and suppliers, and application of the correct “sourcing levers” to the appropriate classes of consumables and spare parts. There are scores of possible levers, each with unique sets of advantages and drawbacks that make them suitable for different commodities:

  • Redundant sources
  • Used or refurbished equipment and parts
  • Long-term contracts
  • Aggressive depreciation
  • Reverse engineering
  • Volume discounts

Fairmarkit’s automated solution facilitates SDI’s procurement services and helps our partners reduce manual processes and interventions to cut costs and ensure adherence to purchase rules. Our combined sourcing strategies provide an antidote to the sales process in which vendors seek to drive up our clients’ expenditures on fasteners, adhesives, solvents, cleaning agents, and a host of other MRO supplies. Absent a sourcing strategy, these costs creep higher and higher, elevating operating costs and cutting into profits.

Sourcing Automation

Automating the procurement and MRO supply chain process enables sourcing efficiency by codifying processes to ensure the lowest total cost of ownership, considering supply reliability, product quality, innovation, compliance, and other factors in addition to pricing. Establishing machine-driven sourcing decisions delivers quality and efficiency no human could hope to achieve:

  • Repetition – Automated business responses ensure all tasks are accomplished at the right time and that nothing slips through the cracks. Automation is perfect for MRO supply reordering, production forecasting, maintenance scheduling, and more.
  • Speed – Machines are the ultimate multitaskers. Computers can compare multiple offers, format data for use in various downstream applications, and generate reports quickly so decisions can be made in real-time.
  • Transparency – Automated invoicing, proposal requests communications, scheduling, and other MRO functions handled automatically create a chain of evidence that allows companies to visualize each process. You can see at a glance which vendors responded to an RFP, which were responsive, and which were selected. This may not be possible when people handle these tasks using a variety of devices, programs, and accounts.

Automation is the answer to MRO sourcing efficiency. SDI automates your procurement and vendor-management processes and ensures their efficacy in cutting supply chain costs and eliminating supply risk. Contact SDI for a demonstration of how our strategic sourcing and supply chain automation services can extract sustainable value for your organization.

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